Fintech and How it is Changing the Finance World
The term “fintech” is derived from the phrases “financial” and “technology.” It refers to the use of technology to provide consumers with financial services and goods. This could be anything related to financial, such as banking, insurance, or investment. Fintech is not a new concept. The financial business has always been influenced by technology. However, because to the internet and the widespread usage of gadgets such as smartphones and tablets, the rate of change has accelerated dramatically in recent years.
Examples of Fintech
Fintech is transforming the financial world for consumers in a variety of ways. For example, you may now open a bank account without physically visiting a bank via the internet. You may sync your account with your smartphone to keep track of your transactions. You may even convert your smartphone into a “digital wallet” and use it to make purchases with money from your bank account.
Fintech is also transforming the insurance and investment industries at a rapid pace. Car insurance companies now provide “telematics-based” coverage, in which your driving is tracked using data from your smartphone or a “black box” installed in your vehicle. This information can then be used to calculate the cost of your insurance coverage. In the future, it may be possible to purchase insurance on a “pay as you go” or short-term basis.
Consumers can now invest over the internet on a “execution only” basis, with no face-to-face interaction, thanks to technological advancements. With little or no human involvement, you may be able to get automated financial advice, or “robo advise,” in the future.
Potential benefits
Speed and convenience
Fintech products tend to be delivered online and so are easier and quicker for consumers to access.
Greater choice
Consumers benefit from a greater choice of products and services because they can be bought remotely, regardless of location.
Cheaper deals
Fintech companies may not need to invest money in a physical infrastructure like a branch network so may be able to offer cheaper deals to consumers.
More personalised products
Technology allows fintech companies to collect and store more information on customers so they may be able to offer consumers more personalised products or services.
Potential risks
Unclear rights
Fintech companies may be new to the financial industry and use different business models to traditional providers. This can make it harder to ascertain which ones are regulated, and what your rights are if something goes wrong.
Making a rash decision
Financial products that are bought instantly online without ever meeting anyone face-to-face may make it easier for consumers to make quick, uninformed decisions.
Technology-based risks
Financial products bought online may leave you more exposed to technology-based risks. For example, your personal data could be mis-used or you could fall victim to cybercrime.
Financial exclusion
While technology increases choice and access for most consumers, it can exclude those who don’t know how to use the internet or devices like computers, smartphones and tablets.
Source: Central Bank of Ireland
